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BUOYED by an improved demand, cement makers have raised prices by Rs 3-7 per 50-kg bag across the country. With this, the retail cement prices have gone up to Rs 260 a bag. Big players such as ACC, Ambuja Cements, Grasim and Ultratech have communicated about the price hike to the dealers. Others like Binani will follow suit this week while a few firms such as Shree Cement will take a call shortly.

The country’s largest cement maker ACC has increased prices by Rs 7 per bag while the thirdlargest cement maker Ambuja has hiked it by Rs 3 a bag. Aditya Birla Group companies — Grasim Industries and Ultratech Cement—have raised it by Rs 5-7 per bag, said dealers.

Ambuja Cements’ marketing head Ajay Kapur said: “The rise in cement prices were due to escalation of demand from rural market and government projects." Top officials of ACC and Grasim Industries have declined to comment on the price hike. Vinod Juneja, managing director of Binani Cement said his company would increase prices from this week. "In Delhi, Lucknow, Chandigarh, Haryana, we are increasing Rs 3 per bag whereas in Gujarat, Mumbai and Maharashtra, the hike will be Rs 5 a bag," he said.

HM Bangur, president of the Cement Manufacturers' Association and managing director of Shree Cement, said: "We will take a call in next few days though demand is still high.”

Cement analysts don't foresee prices to soften in the short run. In the long term, however, they expect prices to fall, as new capacities come up for production. The outlook for the first quarter of FY10 looks better than what it was a year ago and expects 8% incremental growth in the current fiscal, analysts added.

Sumit Banerjee, managing director of ACC, had said last week: "Prices need to go up to Rs 300 per bag because current prices do not support ACC's plans to invest in creating new capacities. It will not be easy for us to go ahead with our future expansion plans beyond 2011."

Cement demand has gone up in March. For example, Aditya Birla Group's shipment in March rose 11.2% to 3.37 million tonnes yearon-year while the growth is marginal (0.5%) to 1.72 million tonnes for Ambuja Cements. India has more than 70 cement companies and a total installed capacity of 200 million tonnes.

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